Dempsey v Dempsey & Australian Associated Motor Insurers Ltd (AAMI) No. Scciv-01-1226

DEMPSEY v DEMPSEY & AUSTRALIAN ASSOCIATED MOTOR INSURERS LIMITED (AAMI)
[2001] SASC 87
MAGISTRATES APPEAL

Gray J: This appeal involves a dispute about a claim under a policy of motor vehicle insurance.
Background:
Despina Dempsey now 38 years and Laurence Francis Dempsey now 73 years were married in the early 1980’s. In 1993 Mr Dempsey purchased a Nissan Navara DX Dual Cab V6 motor vehicle for $32,000.00 (“the vehicle”). The vehicle was purchased for Mrs Dempsey. At all times, it was registered in her name. Insurance was reviewed on 19 August 1999 and cover effected in the amount of $20,000.00.
Mr and Mrs Dempsey’s marriage ended in September 1999. They were later divorced. Mrs Dempsey maintained possession of the vehicle and went to live with her mother, Maria Shetlat.
The trial
The plaintiff, Mrs Dempsey made a claim against Australian Associated Motor Insurers Ltd. (“AAMI”) for property damage. Her case was that the vehicle had been taken without her permission and damaged in circumstances that gave rise to entitlement to insurance cover.
The vehicle was damaged at a time proximate to Mr and Mrs Dempsey’s marriage breakdown. There was evidence to suggest that whoever took the vehicle had a key and an immobiliser transponder. AAMI alleged that Mr Dempsey had taken and damaged the vehicle. Mr Dempsey denied having done so. As a result, a dispute arose as to who had the keys and transponders and whether Mr or Mrs Dempsey had been responsible for the damage.
Mrs Dempsey sued AAMI claiming under the policy. AAMI joined Mr Dempsey as a third party alleging, in effect, that if it was liable to Mrs Dempsey, then it was entitled to be indemnified by Mr Dempsey.
The learned magistrate (“the magistrate”) accepted the credibility and reliability of Mrs Dempsey. He rejected Mr Dempsey’s account. He found that Mr Dempsey had taken and damaged the vehicle. Mrs Dempsey recovered judgment in the amount of $14,817.00 against AAMI. AAMI’s third party claim against Mr Dempsey was also successful in the same amount. Mr Dempsey was ordered to pay Mrs Dempsey and AAMI’s costs on an indemnity basis. Mr Dempsey appealed against the judgment entered in favour of AAMI. He also complained about the assessment of damages. For this reason Mrs Dempsey was a party to the appeal. The judgement in favour of Mrs Dempsey was not challenged by AAMI.
Mrs Dempsey’ Case
Mrs Dempsey gave evidence and called a number of witness including her new partner David Orr. On 27 October 1999 Mrs Dempsey took two of her children to school. She then drove to Mr Orr’s home. He drove her to a cleaning job at Fullarton at approximately 9:30 am. Whilst waiting for Mrs Dempsey to complete the job, Mr Orr had ‘time to kill.’ He drove the vehicle to several locations and then parked outside a shop on Unley Road at approximately 11:00 am. Mr Orr manually locked the vehicle and activated the ignition immobiliser with the transponder. He entered the shop and remained there for approximately 10 minutes. When he returned the vehicle had gone. He searched unsuccessfully along Unley Road and then returned to the shop, called the police and reported the vehicle stolen. He hailed a taxi and returned to Fullarton to meet Mrs Dempsey. It was decided that they would report the theft to the Malvern Police Station.
Whilst walking to the Malvern police station Mrs Dempsey used her mobile telephone to call Mr Dempsey. She said “Did you take my car?” to which he responded “No, why would I when I’ve got my own car?.” The Malvern police station was closed so Mrs Dempsey reported the theft to the Salisbury police station that evening. The following day she lodged a “declaration of loss by theft” with AAMI.
At approximately 2:10 am on 28 October 1999 a security guard observed the vehicle parked at Glenside Hospital. It was unlocked. The security guard locked the driver’s side door and noticed that there were no keys in the vehicle. He did not notice any damage. When next on duty on 30 October 1999 at 2:00 am he again saw the vehicle. He observed that all doors were unlocked. He opened one door and detected a strong smell of petrol. He again locked the doors. Later that morning at about 5:30 am he saw the vehicle again and noticed that both headlights were broken. He notified the police.
Mrs Dempsey and Mr Orr attended the vehicle later that morning. The headlights were broken and each of the major panels had been damaged. The interior had also been vandalised. AAMI removed the vehicle. A crystalline contaminant – either sugar, sand or dirt had been introduced in and around the oil filter cap.
The vehicle had been thoroughly cleaned and detailed shortly prior to this incident. Mrs Dempsey had considered the possibility of obtaining a smaller more economical vehicle. She had received a valuation of approximately $16,000.00 but had not made any final decision.
On 15 October 1999 the vehicle had been scratched with a sharp object and the radio aerial buckled. When Mrs Dempsey lodged her theft claim with AAMI she specified that there was existing damage to the vehicle. The experts who examined the vehicle after the alleged theft found that there was no damage to the locks, the ignition or the immobiliser system.
Mrs Dempsey maintained that there were always two sets of keys to the vehicle. Each set contained an ignition key which also operated the door locks, a key to the canopy and a transponder which operated the ignition immobiliser. She claimed that she had an agreement with Mr Dempsey that she would collect furniture and the other set of keys from him on 16 October 1999. This was 19 days after the separation. However Mrs Dempsey said that he reneged on the deal. An argument ensued. She said that he refused to giver her the keys unless she paid him $70.00. He then seemed to “take out a pair of pliers and bend the key”. He then threw the key and the transponder into the garden. It was to be inferred that he must have later recovered and retained this set of keys.
Mr Orr’s evidence was that he had locked the vehicle when he left it on Unley Road. The clear inference to be drawn was that whoever took the vehicle must have had a set of keys and a transponder. This was reinforced by the security guard’s evidence – that he initially observed that the vehicle’s doors were unlocked, he locked them and then found them to be unlocked again.
Mr Dempsey’s Case
Mr Dempsey maintained that he did not have possession of the second set of keys and transponder. He said that Mrs Dempsey had taken both sets at the time of separation. He denied that an altercation took place and initially denied demanding $70.00 from her. He later said that he did not really know what had happened to the second set of keys and that it was not until the day after Mrs Dempsey had collected her furniture that he noticed that the keys were gone.
Mr Dempsey said that on the day of the alleged theft Mrs Dempsey’s mother Mrs Shetlat arrived at his home at 9:15 am or 9:30 am. She was to clean the home opposite his premises. They had coffee and she was at his home for approximately 20 minutes. Mr Dempsey said he then left to go to the bank in Hutt Street which took approximately 20 minutes. He said he returned home between 11:00 am and 11:30 am.
The whereabouts of the keys and transponders and who had access to the vehicle aroused the suspicions of AAMI. If Mrs Dempsey had both sets in her possession it was arguable that she and possibly Mr Orr had orchestrated the theft and subsequent damage. If Mr Dempsey had possession of one set, then it was arguable that he had taken the vehicle and caused the damage. Accordingly, AAMI refused to indemnify Mrs Dempsey until this factual matter was resolved by the court.
The Magistrate’s findings
As earlier observed the magistrate found in favour of Mrs Dempsey in her claim against AAMI. He assessed her damages at $14,817.00. There was judgment in the same amount for AAMI on the third party claim against Mr Dempsey. The magistrate’s critical findings included:
-The vehicle had two sets of keys and after the separation Mr and Mrs Dempsey each retained possession of a set of keys and transponder which activated the immobiliser system.
-On the day in question Mr Dempsey came upon the vehicle, whether by design or accident and removed it from Unley Road by activating the locking and immobiliser systems and secreted the vehicle from the view of Mr Orr and Mrs Dempsey.
-At some subsequent stage Mr Dempsey removed the vehicle to the north-eastern carpark of Glenside Hospital in an area familiar to him by virtue of his having been an in-patient at that hospital five years earlier.
-At some stage Mr Dempsey, alone or in concert with a person or persons unknown, damaged the vehicle in the manner that has been described by both Mrs Dempsey and Mr Orr and also by the various mechanical experts.
-Mr Dempsey introduced, via the vehicle’s air induction system, sand or a similar crystalline contaminant and he introduced into the lubricating system sugar or a similar crystalline substance.
-Mr Dempsey was motivated by his desire for vengeance and retribution against Mrs Dempsey on account of her sudden separation from him.
Issues on Appeal
Numerous complaints about the magistrate’s findings were advanced however few were articulated clearly. Minimal supporting transcript references were provided. When pressed, counsel vaguely identified, in some instances, paragraphs of the magistrate’s reasons that were challenged.
The Onus of Proof
All counsel accepted that on the issue of onus of proof and strength of evidence, the relevant principles were to be found in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd.[1] Mason CJ, Brennan, Deane and Gaudron JJ said:
“The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary ‘where so serious a matter as fraud is to be found’. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct. As Dixon J commented in Briginshaw v Briginshaw[2]:
‘The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved ...’
There are, however, circumstances in which generalisations about the need for clear and cogent evidence to prove matters of the gravity of fraud or crime are, even when understood as not directed to the standard of proof, likely to be unhelpful and even misleading. In our view, it was so in the present case.”
[1] (1993) 110 ALR 449 at 449-450
[2] (1938) 60 CLR 336 at 362
It was not suggested that the magistrate misunderstood these principles however it was submitted that the evidence lacked the strength to establish on the balance of probabilities the facts. It was said that the clear and cogent evidence necessary to prove the gravity of the crime was not present.
A review of the magistrate’s reasons show no departure from these principles. Clear, cogent evidence supported his findings. No error has been demonstrated. This complaint must be rejected.
Incorrect Starting Point
At the commencement of his reasons the magistrate identified what he described as a “conundrum”. If Mrs Dempsey had possession of both sets of keys and transponders at the relevant time then it was easy for her to have orchestrated the theft. If Mr Dempsey had possession of the second set of keys then suspicion fell on him. The magistrate said:
“It seems that there is no ‘third way’ that arises by way of reasonable inference from the circumstances.”
He later found that there was
“a cogent inference to be drawn from that evidence is that whoever took the car from Unley Road to Glenside must have had the correct key and transponder…whoever visited the Glenside Hospital carpark and unlocked the car must have had the correct key and transponder.”
It was submitted by counsel for Mr Dempsey that the magistrate had incorrectly dismissed other suggested hypotheses which provided an explanation for the alleged theft. He referred to the possible use of an electronic scanner and the possibility that the vehicle was towed away locked from Unley Road. The magistrate observed that he had heard no evidence that could seriously sustain these hypotheses. He said that “neither was seriously entertained”. His reasons show that he considered the hypotheses but afforded them little or no weight. He did not have regard to irrelevant material or fail to have regard to relevant material. The hypotheses were unsupported by the evidence. Commonsense offered no support. No error has been demonstrated. This complaint must be rejected. It is misconceived.
Challenge to the Magistrate’s Findings on Credit
Counsel for Mr Dempsey complained about the magistrate’s acceptance of the evidence of both Mrs Dempsey and Mr Orr. It was submitted that the magistrate should have preferred the evidence of Mr Dempsey.
As earlier observed the magistrate rejected the evidence of Mr Dempsey. The magistrate found that he removed the vehicle from Unley Road and took it to Glenside Hospital. He or someone acting in concert with him damaged the vehicle.
The advantages enjoyed by a trier of fact at first instance when assessing witness credibility were discussed by Brennan, Gaudron and McHugh JJ in Devries v Australian National Railways Commission[3]:
“More than once in recent years, this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against – even strongly against – that finding of fact. If the trial judge’s finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge ‘has failed to use or has palpably misused his advantage’ or has acted on evidence which was ‘inconsistent with facts incontrovertibly established by the evidence’ or which was ‘glaringly improbable’.”
[3] (1992-1993) 177 CLR 472-479 see also Rosenberg v Percival [2001] HCA 18 per Gleeson CJ at [37-39]
These principles were approved in State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq)[4]. Kirby J said:
“Appellate judges must necessarily perform their statutory function. They must rehear the matter and form their own conclusions on the evidence recorded at the trial. Rising to their duty, they must condescend to a re-examination of the facts, if their statutory charter so requires or permits. Yet that re-examination obliges appellate judges to take into account, and give full weight to, the advantages which the trial judge had and which, in the nature of their different functions and purpose, they may not have.
None of the foregoing considerations requires the abandonment of the respect which appellate courts, by present legal authority, must pay to the advantages enjoyed by the trial judge. Instead, they require renewed attention to precisely what the advantages are which the trial judge has over those enjoyed by the appellate court, conducting a second look at the facts, usually with more opportunity to evaluate particular facts than is possible in the midst of a trial and with the appellate advantage of viewing such facts in the context of the record of the complete trial hearing.”
[4] (1999) 73 ALJR 306 at 323
The magistrate provided detailed reasons to support his conclusions on credit. He analysed the evidence and disclosed his reasoning. He was impressed by the evidence of Mrs Dempsey and Mr Orr and in particular their consistency under cross-examination. He detected no indications of conspiracy. He noted that any differences were of a minor and inconsequential nature. He rejected the suggestion that Mrs Dempsey was motivated by greed. It was open for the magistrate to conclude that Mrs Dempsey’s conduct when advancing her insurance claim was supportive of her credit.
The magistrate was unimpressed by the evidence of Mr Dempsey. He considered that a number of his explanations were extraordinary and incredible. An examination of the transcript demonstrates that the magistrate was well justified in coming to an adverse conclusion with respect to Mr Dempsey’s credit. In regard to the issue about the possession of keys, the magistrate was entitled to be critical of Mr Dempsey’s change of story between evidence-in- chief and cross-examination. Mr Dempsey’s attempt to establish an alibi was unconvincing. He was unable to satisfactorily explain what he was doing during the critical period when he was absent from his home that morning. There were many inconsistencies between his evidence and that of the other witnesses and internal inconsistencies in his evidence. The magistrate ultimately concluded:
“I find, by virtue of the above analysis, that the vehicle was stolen but not by, or with the connivance of, the plaintiff or any of her witnesses. I find that the theft was committed by the third party alone or in concert with a person or persons unknown. I find that Laurence was not a satisfactory witness and that he did his very best to conceal his true involvement. Where his evidence conflicts with that of Despina or David Orr, I unhesitatingly prefer the evidence of the last two mentioned persons.”
The magistrate had the advantage of observing the witnesses and was in the best position to make an assessment of credit. There were ample grounds to support the magistrate’s conclusions. It has not been shown that he has overlooked relevant considerations or misused his advantage. No error of law has been demonstrated. This complaint must be rejected.
Hostile Witness
During the trial, counsel for Mr Dempsey called Mrs Shetlat under subpoena. As earlier observed, Mrs Shetlat worked as a cleaner at the premises opposite Mr Dempsey’s home. Mr Dempsey claimed that Mrs Shetlat had been at his home on the morning of the alleged theft. He claimed that she was with him at a time that would have made it impossible for him to have taken the vehicle. In substance, he claimed that she was his alibi.
During the examination of Mrs Shetlat, counsel for Mr Dempsey applied to have her declared hostile pursuant to section 27 of the Evidence Act 1929 (SA). In support of the application counsel for Mr Dempsey relied on a statement obtained from Frank Church, a private investigator. This statement was said to be a prior inconsistent statement.
Earlier, during the course of trial preparation, Mr Church was instructed to approach Mrs Shetlat to obtain a statement. He called her mobile telephone whilst she was shopping at a supermarket. Mrs Shetlat was 73 years of age and had a poor command of English. She made it clear that she did not want to speak with Mr Church except in the presence of her daughter. Mr Church ignored her pleas. He claimed to have had a conversation with her about Mr Dempsey’s movements. It appears that no copy of the statement was forwarded to Mrs Shetlat for correction or verification and no follow up interview was attempted.

The magistrate was critical of the way in which Mr Church approached Mrs Shetlat during the course of his investigations. The magistrate took the view that she had been taken advantage of by Mr Church in unfair circumstances. These criticisms were well justified by the evidence. The magistrate said:
“I frankly was outraged at that attempt for many reasons. Mrs Shetlat appeared in court as a 73 year old lady whose command of the English language (her original language is Greek) was very poor and she only spoke in halting and fractured English. She appeared to be intimidated and overwhelmed by these court proceedings and to have great difficulty in understanding questions put to her. She probably did not require an interpreter but it was a borderline thing. My disapproval of [Counsel for Mr Dempsey’s] application was registered on the basis that Mr Church did not advise Mrs Shetlat that he was going to record the conversation and use it later. He knew that she was not going to approve any discussion with her without her daughter being present. If (like the court) he had difficulty getting through to her in English and understanding her responses in English then those difficulties would have been considerable. In all the circumstances I considered it to be utterly unfair for the application under s.27 to proceed. Having said that, however, and having heard her evidence I discount it not for reasons of probity or credit but for testimonial reasons only. I think that Mrs Shetlat had a defective memory, a defective understanding and a deficiency in communication, all of which were probably attributable to her age and her language difficulties. Therefore, I use her evidence neither for nor against any party. That is not meant as an insult to her but one observation whereby I seek to protect her probity and not make any adverse comment thereon, as [counsel for Mr Dempsey] would have wanted the court to do. I therefore make it perfectly clear that I do not use Mrs Shetlat’s evidence in these proceedings to the advantage or disadvantage of any party.”
The magistrate put the substance of the alleged conversation to Mrs Shetlat for comment. She disagreed with part of Mr Church’s account. The magistrate declined to allow the evidence of Mr Church’s statement to be admitted.
It is to be observed that counsel for Mr Dempsey did not object to the magistrate putting Mr Church’s statement to Mrs Shetlat. Mr Church was not presented as part of Mr Dempsey’s case. There was only a foreshadowed application to call him to give evidence.
Counsel for Mr Dempsey submitted that the magistrate erred. It was said that he failed to have regard to a material consideration - that even if Mrs Shetlat’s evidence was unfavourable, her prior statement still had the potential to corroborate Mr Dempsey’s whereabouts on the morning of the alleged theft.
Section 27 of the Evidence Act provides:
“A party producing a witness shall not be allowed to impeach his credit by general evidence of bad character; but if the judge is of opinion that the witness is adverse, the party may —
(a)     contradict the witness by other evidence; or
(b)     by leave of the judge, prove that the witness has made, at any other time, a statement inconsistent with his present testimony: Provided that, before giving such last-mentioned proof, the circumstances of the supposed statement sufficient to designate the particular occasion, must be mentioned to the witness, and he must be asked whether or not he has made the statement.”
In McLellan v Bowyer[5] the High Court considered the elements of hostility:
“But it has been settled for many years that although hostility, or adverseness, may appear from the demeanour of the witness, this is not the only factor to which a court may have regard. In particular, it may have regard to previous inconsistent statements made to a party or to a party’s attorney or upon oath in a court of bankruptcy or to an officer of police. In some of the cases there seems to be implicit the notion that leave may be granted when the party calling the witness is, by reason of the earlier statement, entitled to assume that the witness will, upon being called, testify in accordance with his statement. This, of course, tends to treat the character and circumstances of the earlier statement as a matter of vital importance … But although it must be conceded that not every witness who testifies inconsistently with an earlier statement can properly be regarded as hostile, or adverse, it is clear that the existence of an earlier inconsistent statement, in whatever circumstances it may have been made, will always be a material matter and, when taken into consideration with other features of the case, may furnish grounds for concluding that the witness is hostile. Whether he is or not is, of course, an objective question of fact, and that being so, it is not essential that the previous inconsistent statement should be shown to have been made to a party, or to his attorney, or, for that matter, that it should appear that the party calling the witness has done so in the firm belief that the earlier statement will be adhered to. Nevertheless, the circumstances in which a statement has been made may well be important for they may be such as to lead strongly to the conclusion that a subsequent departure from its substance can proceed only from hostility.”
[5] (1961-62) 106 CLR 95 at 103-4
In R v Hutchison[6] King CJ referred to McLellan and then articulated the test for determining whether a witness is hostile:
“I deduce … that the correct test as laid down by the High Court is whether the witness is deliberately withholding material evidence by reason of an unwillingness to tell the whole truth at the instance of the party calling him or for the advancement of justice. The test so formulated does not depend upon the motive of the witness in withholding evidence or, of course, giving false evidence. I think that the High Court, by implication, affirmed the views on this point expressed by Sholl J in R v Hayden. If a witness gives false evidence or withholds evidence by reason of an unwillingness to tell the truth or the whole truth at the instance of the party calling him or for the advancement of justice, it matters not whether his motive is hostility to the cause of the party calling him, sympathy for the cause of that party’s opponent, desire to advance or protect his own interest in some way, or some other motive. The crucial consideration is that the party calling the witness is unable, by reason of the witness’s unwillingness to tell the truth or the whole truth, to elicit the true facts by non-leading questions.”
[6] (1988-90) 53 SASR 587 at 592
Whether hostility can be inferred is a matter of fact in the circumstances of the particular case. It is well settled that if proved, a prior inconsistent statement is a fact from which hostility may be inferred. The circumstances in which a statement is taken are also relevant to any consideration of hostility.
In this case a statement was taken from an elderly lady with a poor command of English. Whilst supermarket shopping she was contacted by mobile telephone and questioned. Mr Church’s confirmed that she did not wish to discuss the matter in the absence of her daughter. He wrote:
“My whole purpose was to arrange an appointment with her to discuss this matter without her daughter being present, however, she was adamant tht she would not see me without her daughter and that any enquiries I had should go through her daughter.”
Notwithstanding these entreaties Mr Church ignored her and pressed on. He did not inform her that the conversation was being recorded. No written account of the alleged conversation was forwarded to Mrs Shetlat. She was given no opportunity to consider or correct what was attributed to her.
Mr Church later noted:
“By this time Ms Shetlat was becoming a little agitated saying that she should speak to her daughter and that anything I had to say should be directed through to her daughter.”
I offered counsel for Mr Dempsey the opportunity to file an affidavit from Mr Church or to call him to give evidence to explain his conduct. No affidavit or oral evidence was forthcoming.
A ruling that a witness is hostile is a matter of discretion for the trier of fact. As earlier observed, the magistrate was entitled on the material before him to be critical of Mr Church. He was entitled to conclude that the statement from Mrs Shetlat was obtained in circumstances of unfairness. He was entitled to find that Mr Church did not advise her that he intended to record the conversation. Any apparent inconsistency between Mrs Shetlat’s evidence and her prior conversation does not necessarily indicate hostility. It may have been a consequence of the unfair circumstances in which the statement was taken. The magistrate was entitled to conclude that Mrs Shetlat was not hostile or adverse. He was entitled to form the view that she was unable to give any evidence to which weight could be attached.
In Blewitt v The Queen[7] Mason CJ, Wilson, Brennan, Dawson and Toohey JJ said:
“It is established that the calling of a witness known to be hostile for the sole purpose of getting before the jury a prior inconsistent statement which is inadmissible to prove facts against the accused is improper and might well give rise to a miscarriage of justice: see R v Thompson; R v Hall.”
[7] (1998) 62 ALJR 503 at 505
In Adam v The Queen[8] Gleeson CJ, McHugh, Kirby and Hayne JJ approved this passage from Blewitt and said:
“Here, so the appellant submitted, there was no doubt that the prosecutor’s purpose in calling Thaier Sako was to get the content of his statement to police before the jury. Indeed, the trial judge had said, in the ruling he gave about granting leave to the prosecutor to cross-examine the witness, that the prosecution’s ‘forensic purpose in calling him would be to get into evidence the substance of what he said [in the interviews with police] as proof of the facts there asserted’. So much may be readily accepted. Further, before the witness was called to give evidence before the jury, the trial judge had (as noted earlier) found that the witness would give evidence that would not accord with what he had said in the interviews and would be unfavourable to the prosecution.
What is important, however, is that, under the Act, evidence of a witness’s prior inconsistent statements will be admitted as evidence of the truth of what was said in them if the evidence is relevant for another purpose (that is, for a purpose other than proof of the truth of what was said in them). If admitted as evidence of the truth of its contents in this way, there would be no tender of a statement ‘inadmissible to prove facts against the accused’ and there would, therefore, be nothing improper in adopting the course proposed. This may be contrasted with the common law position where a prior inconsistent statement is not evidence of the truth of its contents, only evidence that the witness may not be telling the truth. It is with those circumstances that Blewitt’s case was concerned, and to which it will still have application in the absence of statutory provisions of the kind now under consideration.”
[8] (2001) 75 ALJR 1537 at [18-19],
In so far as counsel for Mr Dempsey sought to tender Mrs Shetlat’s prior statement in accordance with Blewitt and Adam it had no probative force in proving the alibi. The prior statement was a statement out of court and was not evidence of the truth of its contents. The purpose of the tender was said to support a submission that Mrs Shetlat had provided an inconsistent account and was hostile. In any event the magistrate did not rely on Mrs Shetlat’s evidence. He considered that she was unreliable. There is no substance to Mr Dempsey’s complaint.
Apparent Bias
Following the magistrate’s refusal to grant the application for leave to prove Mrs Shetlat’s prior statement, counsel for Mr Dempsey made an application for the magistrate to disqualify himself for apparent bias. The basis of the application was the magistrate’s conduct at the time he ruled on the hostile witness application. No other matters were relied upon at trial to support the application. There was no allegation of actual bias. The magistrate refused to disqualify himself and the trial proceeded.
On appeal, counsel for Mr Dempsey sought to raise further matters to support the contention that there was an appearance of bias. He referred to a number of scattered transcript references to support the submission.
The test for establishing bias was discussed in Kola v District Court of SA[9] where Doyle CJ said:
“It has been established by a series of decisions of [the High Court] that the test to be applied in Australia in determining whether a judge is disqualified by reason of the appearance of bias … is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide.
The test contained within this statement of principle is objective. It requires no consideration of the state of mind of the Judge. The focus is on how the decision and the decision-making process might appear, reasonably considered.”
[9] [2001] SASC 268 at [27]
In Johnson v Johnson[10] the High Court made the following observations:
“The hypothetical reasonable observer of the judge's conduct is postulated in order to emphasise that the test is objective, is founded in the need for public confidence in the judiciary, and is not based purely upon the assessment by some judges of the capacity or performance of their colleagues. At the same time, two things need to be remembered: the observer is taken to be reasonable; and the person being observed is "a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial" Vakauta v Kelly (1988) 13 NSWLR 502 at 527, per McHugh JA, adopted in Vakauta v Kelly (1989) 167 CLR 568 at 584-585, per Toohey J.
Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge Webb v The Queen (1994) 181 CLR 41 at 73, per Deane J., the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx. In Vakautav Kelly (1989) 167 CLR 568 at 571 Brennan, Deane and Gaudron JJ, referring both to trial and appellate proceedings, spoke of "the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case." See also Re Lusink; Ex parte Shaw (1980) 55 ALJR 12 at 15; 32 ALR 47 at 53, per Murphy J.. Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgment. Judges are not expected to wait until the end of a case before they start thinking about the issues, or to sit mute while evidence is advanced and arguments are presented. On the contrary, they will often form tentative opinions on matters in issue, and counsel are usually assisted by hearing those opinions, and being given an opportunity to deal with them.”
[10] (1999-2000) 201 CLR 488 at [12] –[13]
In IOOF Australia Trustees Ltd v Seas Sapfor Forests Pty Ltd[11] Doyle CJ said:
“The observer is to be taken to understand that there will be occasions when both judge and counsel will, to put it bluntly, express themselves in a manner that is to be regretted. It is important that judges maintain a calm and judicial manner, but as I have already said a fair-minded observer is not to be taken to believe that judges are prefect. The observer will accept that occasional departures from the appropriate standard are nothing more than indications of human frailty.”
[11] (2000) 78 SASR 151 at [194]
On appeal counsel for Mr Dempsey submitted that a reasonable fair minded observer would be led to believe that because the magistrate had been openly critical of the investigative methods adopted by Mr Church, he may not bring an impartial mind to the resolution of the issues in the case. Further it was said that in putting the prior statement to Mrs Shetlat, the magistrate usurped counsel for Mr Dempsey’s role as advocate.
As earlier observed, the magistrate refused the application to prove the prior inconsistent statement. Although it may have been preferable for him to have adjourned to consider his reasons for ruling rather than dismissing the application immediately, the magistrate allowed time for submissions and it was within his discretion to rule as soon as practicable. Whilst the magistrate used robust language during the exchange, it was accepted that such language was directed towards the perceived unfairness in which Mrs Shetlat’s statement had been obtained. It was not directed toward a witness or one of the parties.
The bias application was and remains misconceived. There was no clear basis for the disqualification. The transcript of argument was of no assistance in advancing counsel for Mr Dempsey’s submission. It reveals that on occasions the magistrate used what might be described as strong language. However I am not satisfied that there was any appearance of bias. The public expect that they may hear a robust debate in court.
An affidavit of a para-legal law clerk who assisted counsel for Mr Dempsey at trial was relied upon to support the appearance of bias application. The affidavit dated 19 October 2001 was of little or no assistance as it either summarised the transcript or alternatively advanced conclusions of the deponent.
Complaint was made that the magistrate usurped counsel’s role by taking over the examination. In substance, the magistrate put the prior inconsistent statement to Mrs Shetlat and obtained her response. Counsel for Mr Dempsey did not object at the time the magistrate was questioning Mrs Shetlat. On appeal it was accepted that the magistrate had asked relevant questions and elicited relevant evidence. It was acknowledged that no complaint was made about the character or content of the questions asked by the magistrate. It was said the extent of the magistrate’s intervention and interruptions was the problem. It was complained that the magistrate prevented counsel for Mr Dempsey from laying a proper foundation for his submission that Mrs Shetlat was hostile. It was said that counsel should have been allowed to lead the evidence as he saw fit. Having reviewed the transcript I have been left with the impression that counsel for Mr Dempsey’s concern was with the adverse ruling and its perceived consequences and not the conduct of the magistrate. I do not consider that this conduct cold have led to any appearance of bias.
I have reviewed the other references in the transcript to which counsel for Mr Dempsey has referred. Whilst it might be said that the magistrate used robust language from time to time, it was no more than that. At times, he and some of the witnesses became frustrated by the repetitive nature of cross-examination. One passage identified by counsel for Mr Dempsey illustrates that point. In response to a question from counsel for Mr Dempsey, Mr Orr replied:
“A.As I believe I said last time at – I wonder, there is a hole in the ozone we’re using so much oxygen going over the same crap.
His Honour: He’s perfectly entitled to make that observation. I have been very tolerant to the degree of [repetition] attached to the evidence. He clearly indicated yesterday and gave evidence. It’s in my note [book], that he thought it was the following Monday or Tuesday. We have been down this path, so he’s entitled to get irritated at repetitive questioning and I’m going to clamp down on it. Now, put the question to him and get him out of the witness box.”

Cross-examination then continued. The magistrate may well have become frustrated during the course of the trial. Although not ideal, it was understandable. It cannot be said that the robust exchange caused any prejudice or detriment in any way to any party in the action.
Having reviewed all of the matters of complaint and having considered their cumulative effect I am satisfied that the allegation of apparent bias must be rejected.
Damages
It was complained that the damages awarded were manifestly excessive. The magistrate awarded Mrs Dempsey $14,817.00 comprising:
-    Towing fee and storage $2,219.00.
-    Repairs to the panel work and interior damage total $5,676.00.
-    Replacement of the engine $5,242.00.
-    For the alternative transport expenses for the vehicle on loan $1,200.00.
-    The ancillary loss of use of registration and insurance $480.00.
The magistrate concluded:
“In total, therefore, I allow damages assessed as above in the sum of $14,817. It therefore follows that I assess the defendant’s entitlement on the claim as against the third party in the same amount. There will be judgement in the above sum on each of the claim and third party claim accordingly.”
The magistrate found that foreign material had been introduced into the vehicle’s air induction and lubricating systems. Expert evidence supported his conclusion that the only workable remedy was a replacement engine. The magistrate’s rejection of the suggestion of alternative repairs was a matter within his discretion. Evidence substantiated the cost of the repair work to panels and the restoration of the interior. The incidental costs of towing, storage, alternative transport and loss of the use of registration and insurance were all proved. No challenge was made to the magistrate’s conclusions about the repair costs. However it was said that it was not necessary to replace the engine.
It was further submitted by counsel for Mr Dempsey that Mrs Dempsey could have taken steps to minimise her loss and that the magistrate failed to consider this factor. It was suggested that Mrs Dempsey did not cancel her registration as early as she could have and that she did not need to pay for the use of a replacement vehicle. It was said that she delayed having the vehicle repaired.
The obligation to mitigate loss is based on the principle “that a victim of a breach of contract is required to respond reasonably to a defendant’s wrong.”[12] The duty to act reasonably was described in Banco de Portugal v Waterlow andSons Ltd[13]:
“Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken.”
[12] Smith v Pisani (2000-2001) 78 SASR 548 at [25]
[13] [1932] AC 452 at 506
The magistrate concluded that “the only just, workable remedy is for the plaintiff to have a replacement engine.” He considered that the towing fee charged was reasonable. He took the view that it was not unreasonable for Mrs Dempsey to have her car stored for reasons of safety and security. The arrangement between Mrs Dempsey and Mr Orr for the use of Mr Orr’s vehicle was an appropriate arrangement. The magistrate concluded that the ancillary loss for loss of use of registration and insurance was reasonable and properly conceded by counsel for AAMI.
The magistrate’s rejection of the submissions of counsel for Mr Dempsey was a matter within his discretion. His conclusions were supported by the evidence. There is no substance to these complaints. No error of law or fact has been demonstrated.
Costs
It was submitted that Mr Dempsey should not have been ordered to pay the costs of both Mrs Dempsey and AAMI. It was said that AAMI should have admitted Mrs Dempsey’s claim and exercised its rights of subrogation. In those circumstances it was contended that the costs of only one party should have been met by Mr Dempsey.
AAMI was placed in a difficult position given the competing allegations. AAMI’s conduct was not inappropriate or unreasonable. Mr Dempsey had led all “a merry dance”. One consequence of this was that he was ordered to pay the costs of the proceedings on an indemnity basis. Counsel did not complain that Mr Dempsey had been ordered to pay costs on an indemnity basis. Costs are a discretionary order. There is no basis on which to interfere with the discretion exercised in this case.
Conclusion
This appeal must be dismissed.
JUDGMENTS CITATIONS LISTED WHERE THEY APPEAR IN THE JUDGMENT
[1] (1993) 110 ALR 449 at 449-450
[1] (1938) 60 CLR 336 at 362
[1](1992-1993) 177 CLR 472-479 see also Rosenberg v Percival [2001] HCA 18 per Gleeson CJ at [37-39]
[1] (1999) 73 ALJR 306 at 323
[1] (1961-62) 106 CLR 95 at 103-4
[1] (1988-90) 53 SASR 587 at 592
[1] (1998) 62 ALJR 503 at 505
[1] (2001) 75 ALJR 1537 at [18-19],
[1] [2001] SASC 268 at [27]
[1] (1999-2000) 201 CLR 488 at [12] –[13]
[1] (2000) 78 SASR 151 at [194]
[1] Smith v Pisani (2000-2001) 78 SASR 548 at [25]
[1] [1932] AC 452 at 506

[2002] SASC 87

15 March 2002